Anyone that really wants to do this can just put a really high number of deductions on their W2. It’s an estimate. For most people you’re trying to get close enough that you either get a small refund or owe a small bit. For these guys obviously they’re trying to make their withholding come out to $0.
Right, it’s just that the IRS will eventually catch up to them because the employer files, so the IRS knows how much they made. When they do catch up, they’ll not only owe the original amount, they’ll owe a giant penalty and interest on it.
It does actually take a while depending on how much you owe exactly. I had a year where my employer wasn’t taking out the right tax amount and I ended up owing a couple grand. I eventually, a few years later, filed that year and a couple more all at once knowing those other years I’d be due a decent refund.
Yeah, for sure it can, especially with the IRS being intentionally underfunded (to reduce their ability to go after rich folks, which takes even more of their time).
Pretty sure there’s a box you can check that more or less says “tax exempt”. Had a co-worker a few years back who’s onboarding paperwork got fucked up and he got a fat tax bill come January. Turns out HR accidentally marked him as tax exempt when he got hired and he never checked his paystubs (they’re behind a shitty payroll app) or just didn’t notice he wasn’t paying tax
That happened to me. I have several “jobs” at my job and they get paid through different entities. I went through the stupid charts and figured out all the withholding amounts and thought I had it right, but the bookkeeper accidentally reported that I have three kids (I have no kids) and then I surprise owed six grand.
That’s basically what happened to his wife a few years later lol. She started a job and they pooched her dependents, company got aquired october,- novemberish and around mid December they swapped all their payroll over to the new company. New payroll department corrected the error and she wound up owing like 4 or 5k in January. They’re not big fans of taxes now haha
Anyone that really wants to do this can just put a really high number of deductions on their W2. It’s an estimate. For most people you’re trying to get close enough that you either get a small refund or owe a small bit. For these guys obviously they’re trying to make their withholding come out to $0.
Right, it’s just that the IRS will eventually catch up to them because the employer files, so the IRS knows how much they made. When they do catch up, they’ll not only owe the original amount, they’ll owe a giant penalty and interest on it.
It does actually take a while depending on how much you owe exactly. I had a year where my employer wasn’t taking out the right tax amount and I ended up owing a couple grand. I eventually, a few years later, filed that year and a couple more all at once knowing those other years I’d be due a decent refund.
Yeah, for sure it can, especially with the IRS being intentionally underfunded (to reduce their ability to go after rich folks, which takes even more of their time).
Pretty sure there’s a box you can check that more or less says “tax exempt”. Had a co-worker a few years back who’s onboarding paperwork got fucked up and he got a fat tax bill come January. Turns out HR accidentally marked him as tax exempt when he got hired and he never checked his paystubs (they’re behind a shitty payroll app) or just didn’t notice he wasn’t paying tax
That happened to me. I have several “jobs” at my job and they get paid through different entities. I went through the stupid charts and figured out all the withholding amounts and thought I had it right, but the bookkeeper accidentally reported that I have three kids (I have no kids) and then I surprise owed six grand.
That’s basically what happened to his wife a few years later lol. She started a job and they pooched her dependents, company got aquired october,- novemberish and around mid December they swapped all their payroll over to the new company. New payroll department corrected the error and she wound up owing like 4 or 5k in January. They’re not big fans of taxes now haha